Fitch has downgraded the viability ratings of ICICI Bank and Axis Bank. The agency has downgraded the bank's Viability Rating (VR) by one notch to 'bb' from 'bb+'.
The rating actions come amid rapid deterioration in the operating environment for banks in India following the coronavirus pandemic and measures to contain the spread of the coronavirus, Fitch Ratings has said.
"The downgrade of ICICI's VR highlights heightened risks to its asset quality and earnings from the disruption in business and consumer activity that we expect to continue well beyond the lockdown in India. Uncertainty about how severely key credit metrics will be affected and the potential for further impact on ICICI's intrinsic creditworthiness mean there is a risk of more negative action on the VR. However, it also factors in ICICI's better loss-absorption buffers, which would support its VR longer than peers with weaker income and capital levels," Fitch Ratings said.
"The downgrade of Axis's VR highlights heightened risks to its asset quality and earnings from the ongoing disruption in business and consumer activity, which we expect to continue well beyond the lockdown in India," Fitch ratings has said.